A 2024 Employers Guide to the Immigration Skills Charge
In this article, our UK Immigration Solicitors take a fresh look at the immigration skills charge and highlight what employers need to know about this charge if your company is applying for a first sponsor licence, are a seasoned sponsor licence holder or are recruiting workers on the Skilled Worker Visa or Senior or Specialist Worker Visa routes.
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For advice on sponsor licences and work visas call OTS Solicitors on 0203 959 9123 or contact us online.
The immigration skills charge
To the uninitiated, the immigration skills charge is a fee payable by a sponsoring employer to the Home Office when the sponsor licence holder recruits an overseas worker and provides them with a certificate of sponsorship to apply for their work visa.
Talk to any business, whether it is a fintech, restaurant or construction firm and they will tell their Sponsorship Licence lawyers how much they resent the immigration skills charge levy. To many UK business owners, it feels as if they are being charged a levy on recruitment when the UK government wants businesses to expand to support the UK economy and, of course, any overseas employees will be paying taxes in the UK.
The rationale behind the immigration skills charge is twofold:
- To act as a deterrent from unnecessarily recruiting overseas employees
- To bring in money to improve the UK education system and the skills of UK-based workers
However, many of our business immigration clients say the immigration skills charge does not work as a deterrent to the recruitment of global talent as the UK does not have the available workers for companies to recruit so the levy is an additional corporate tax.
Costing the immigration skills charge
The immigration skills charge is paid for each sponsored employee so the overhead can add up if your company is heavily reliant on overseas workers, especially as the cost must be paid in full when the certificate of sponsorship is requested.
If a business needs one or two overseas recruits to kickstart company growth or other specialist skills (for example, a digital sector or a fintech company) the immigration skills charge cost is based on employee numbers rather than the visa applicant's job description, salary or their importance to the success of the business.
The Home Office does not offer a line of credit with monthly immigration skills charge payments even though the sponsor licence holder is only gradually getting the benefit of the sponsored employee's daily work.
The immigration skills charge fee can appear modest until a sponsor licence holder scales the fee up for the length of the visa applicant’s visa and calculates the number of employees the company will be recruiting as global talent.
The immigration skills charge costs are based on firm size and are:
- £364 for a year and £182 for 6 months if the sponsoring employer is a ‘small business’
- £1,000 for a year and £500 for 6 months if the sponsoring employer is classed as ‘large’
Employers cannot apportion the immigration skills charge to less than 6 months payment. For example, a Skilled Worker Visa applicant coming to the UK for a 15-month contract would need their employer to pay the immigration skills charge for 18 months.
Company size and the immigration skills charge
Small or large is defined by the Home Office using a definition in the Companies Act. A company is classed as a ‘small’ sponsor licence holder if at least 2 of the following apply:
- Annual turnover is £10.2 million or less
- Total assets are worth £5.1 million or less
- 50 employees or fewer
Charitable sponsors also fall within the lower immigration skills charge bracket but the charity needs to be a registered charity in England and Wales, Scotland or Northern Ireland or an exempt or excepted charity.
If a company does not meet 2 of the above criteria it falls within the definition of large. Key personnel need to be told if a company moves from small to large. For example, if the company met the criteria because it had fewer than 50 employees but no longer does so. Failure to pay the correct immigration skills charge for the size of the business could place the sponsor licence at risk.
Immigration skills charge exemptions
The immigration skills charge is payable when assigning a certificate of sponsorship to a recruit who is applying for a Skilled Worker or Senior or Specialist Worker visa provided that the worker is either:
- Applying for their visa from outside the UK and they want a work visa for 6 months or more
- Applying for the visa from within the UK – there is no 6-month exception
Job exemptions
There are some sponsored jobs with standard occupational classification codes that exempt the sponsoring employer from having to pay the immigration skills charge. They are currently:
| Code | Job description |
| 2111 | Chemical scientists |
| 2112 | Biological scientists and biochemists |
| 2113 | Physical scientists |
| 2114 | Social and humanities scientists |
| 2119 | Natural and social science professionals |
| 2150 | Research and development managers |
| 2311 | Higher education teaching professionals |
| 2444 | Clergy |
| 3441 | Sports players |
| 3442 | Sports coaches, instructors or officials |
Students
If a company sponsors a person who applies for a work visa whilst an international student on a Student Visa the immigration skills charge is not payable on the applicant’s switch application to either a Skilled Worker or Senior or Specialist Worker visa.
EU employees sponsored on the Global Business Mobility Senior or Specialist Worker route
The Home Office says you can distinguish between EU and non-EU-sponsored employees if the employee is being sponsored for a Senior or Specialist Worker Visa. The immigration skills charge is not payable if all these criteria are met:
- Certificate of sponsorship assigned on or after 1 January 2023
- Employee is a national of an EU country or holds a Latvian non-citizen’s passport
- The employee normally works in the EU for an EU business but they have been transferred to work in the UK
- The certificate of sponsorship is for no more than 36 months
Employers should note that the exemption does not cover EEA, Swiss nationals or workers from Iceland, Norway, Liechtenstein and Switzerland or any non-EEA country.
Asking an employee to pay the immigration skills charge
The immigration skills charge is payable by the UK sponsoring employer to the Home Office. The work visa applicant cannot be asked to pay the fee on behalf of the company. That is against the rules and could have serious sponsor licence repercussions.
A sponsor licence holder cannot ask a visa applicant to pay the immigration skills charge as an upfront fee. The sponsoring employer also cannot:
- Deduct the immigration skills charge from the employee’s first month's salary
- Deduct the immigration skills charge on a piecemeal basis from the employee’s monthly salary
- Seek repayment of the immigration skills charge from the employee if the employee gives notice and leaves the employment of the sponsoring employer before the end date on their certificate of sponsorship
Even if the employee’s contract of employment says a sponsoring employer is entitled to do any of the above, it is not allowed and the company risks losing its sponsor licence.
The consequences of asking an employee to pay the immigration skills charge
If a sponsoring employer asks a Skilled Worker Visa applicant or Senior or Specialist Worker Visa applicant to pay the immigration skills charge or slips a clause into the worker’s contract of employment then the request or term in the contract cannot be enforced and they could place their sponsor licence at risk. Ultimately the sponsor licence could be suspended or revoked.
If a sponsor licence is suspended a UK business cannot recruit additional sponsored overseas workers. That is a massive issue if a company has a high staff turnover or if they employ one or two highly specialised skilled employees on Skilled Worker Visas who could be headhunted by a competitor and who would be impossible to replace other than through a global talent search.
If the Home Office finds out that a company has been asking its sponsored employees to pay the immigration skills charge then Sponsorship Licence lawyers say the first consequence could be a Home Office compliance visit. The outcome of that visit could be a licence suspension and action plan and ultimately the licence could be revoked.
When a licence is revoked, a sponsor cannot continue to employ any of its sponsored workforce. Every sponsored worker will have their visa curtailed and get 60 days to leave the UK, switch to a new sponsoring employer or switch to a non-sponsored visa route.
Litigation risk of getting the immigration skills charge wrong
A company is placed at litigation risk if the company cannot sponsor overseas workers because it has lost its sponsor licence. Depending on the number of overseas workers employed by the company this could have massive consequences on the firm’s ability to meet its contractual obligations to third-party users of its products or services.
Not only could the sponsor licence holder face reputational damage from the loss of the sponsor licence and ability to meet contractual deadlines it could also be sued by end users of its products or services for failing to meet contractual obligations or meet deadlines. Even if a sponsor licence holder can employ new non-sponsored staff the extra costs of recruitment and training, as well as the reputational damage of the loss of the sponsor licence, will eat into profit.
Sponsorship Licence lawyers can help answer immigration skills charge questions
The immigration skills charge may appear straightforward – pay it or your job applicant does not get their visa. However, many employers have questions about calculating the immigration skills charge, the circumstances when they can ask for Home Office reimbursement and what they should do if they are accused of paying the wrong amount in immigration skills charge or requesting reimbursement from an employee.
At OTS Solicitors our expert Business Immigration Solicitors and Employment Lawyers can guide you through the immigration rules, the exemptions on the immigration skills charge, and associated employment issues and help you manage your sponsor licence with our sponsor licence management service.
UK Online and London-Based Immigration Solicitors and Sponsorship Licence Lawyers
For work visa and business immigration advice call OTS Solicitors on 0203 959 9123 or contact us online.
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